DETERMINANTS OF COMPANY PROFITABILITY PERFORMANCE IN MALAYSIAN HEALTHCARE SECTOR

Abstract

Over the past few years, the healthcare sector has been growing exponentially due to rapid development in medical and pharmacy technology. It is very interesting to explore the factors that affect the success of healthcare companies, which can have a greater impact on their profitability than we previously thought. As a result, the main objective of this study is to examine the factors that affect the companies’ profitability performance in the Malaysian healthcare sector over an eleven-year period (2010–2020). There are four publicly traded companies in Malaysia’s healthcare sector that have been included in the sample. The companies are Top Glove Corporation Bhd, Duopharma Biotech Bhd, KPJ Healthcare Bhd, and Apex Healthcare Bhd. Considering that healthcare is an important component of the companies’ competitiveness and profitability in the current situation, this study has been conducted to examine the internal factors that contributed to the profitability performance. This study used the Fixed Effects Model to analyse profitability performance in the healthcare sector. The independent variables involved in this study are asset turnover, current ratio, and leverage, while the dependent variable is profitability proxied by gross profit margin. The results have shown that asset turnover has a negative significant relationship with profitability, while leverage has a negative relationship but not significant towards profitability. However, the current ratio indicates a positive and significant relationship towards the profitability of the selected Malaysian healthcare companies. The findings provided in this study will provide some guidance for boosting profitability and enhancing the financial performance of the healthcare companies in Malaysia.